What differentiates the current economic malaise from recessions past, in my opinion, is the lack of an obvious exit strategy. People who know a lot more about economics than I do have suggested that our situation is uncomfortably similar to Japan's real estate bubble in the early 1990s – the one that initiated a fifteen year recession from which the nation never quite emerged. Policymakers seem ill-prepared to address the fact that we may be entering a lengthy period in an economic trough as opposed to a sharp but brief recession from which we'll emerge Better and Stronger than before, as was the case with the early 1990s recession in the U.
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What is the exit strategy? Sure, real estate prices will probably bounce back at some point (although not to the ridiculous levels of the previous decade) and the financial sector will stabilize. But what is the big growth industry that will fuel our economic recovery? It is beginning to feel realistic rather than pointlessly alarmist to suggest that instead of a "recession" we are actually seeing a downshifting of our equilibrium level of prosperity. Policymakers are beginning to recognize the elephant in the room – the possibility that we might not get back to our previous standard of living.
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Not this year, and maybe never. Like Americans in the 1970s had to face the fact that the good times of the 1950s were gone for good, today we have to wonder if even the unequally distributed "good times" of the 1990s are better than we can ever hope to see again.
Michigan leads the nation with an official unemployment rate of 14.7% – and a real-world rate that might be twice that. Among other factors, the collapse of the domestic auto industry has hit the state hard. I feel for the state's elected officials. Honestly, what in the hell are they supposed to do? Michigan hasn't stumbled into some sort of temporary economic torpor.
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It is, for all intents and purposes, dying. The auto industry is never coming back; any growth the "domestic" automakers experience in the future will be driven by production in low-wage countries or, if domestic, low-wage southern states. Michigan has no natural resources that can sustain it the way Texans rely on oil money in hard times. It has no other industry of note. It has a poorly-educated population that most potential employers would avoid at all costs. There is nothing in the state to fuel a recovery and nothing for it to do but sit back and watch its population fall year after depressing year.
Their options are few. Unlike economic sinkholes in the south, Michigan can't even sell itself as a tourist/retiree destination. "Visit Flint" and "Come to Kalamazoo, where it snows so much you'll wish you were fucking dead" don't strike me as winning ad campaigns. Instead they'll probably go the route of Ohio in the Rust Belt eighties – deluding themselves into thinking that they can lure a bunch of "high tech" industry to the state's abandoned cities.
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As Ohio found out, there are 49 other states with the exact same plan competing for the exact same employers. And since everyone's offering the same deal – tax breaks, free land, eager workforce, etc etc – it's hard to see how Michigan can compete.
I don't mean to pick on our friends in Michigan, and certainly many other states in the Northeast and upper Midwest face the same dilemma. It is a microcosm of our national dilemma – what exactly are we good at anymore? Now that businesses are confronted with such strong incentives to ship jobs overseas, we've created an economic void that hasn't been filled. And we don't even have a half-decent idea of how to start filling it. Without some sort of speculative bubble, be it dot-com stocks or housing prices, to create the illusion of prosperity we as a nation are going to confront the same dilemma with which a few states like Michigan are already faced. The economy we had is gone, maybe forever. And no one appears to have the faintest idea how to replace it. The Clinton-era balm of re-training and educating workers in some vague and unspecified way for some vague and unspecified jobs has been exposed as a fraud. Now we don't even have a half-decent lie to peddle.
OliverWendelHolmslice says:
I'm hoping one positive outgrowth of this long term economic downturn is the acceptance and promulgation of what the right wing derisively refers to as "class warfare", and what people with opposable thumbs refer to as "the working class standing up for themselves." I'm no communist, but our modern lassaiz faire, let corporations do whatever they damn well please while paying themselves huge bonuses while failing, brand of capitalism needs a swift kick in the ass.
An angry and mobilized working class would be a powerful political force for progressive reform.
Matthew says:
I have nothing worthwhile to say, except that this article is interesting, and intersects with several of the same subjects.
http://www.tnr.com/article/economy/wagoner-henderson
Also, unemployment is awesome. I don't know what everyone else is bitching about. Now, to play more 4 AM halo and watch tennis in far away countries!
Parthenon says:
And we come again to the central problem of voting: Shameless fucking liars who will put a sprig of parsley on your plate of shit are more likely to run things than the ones who will lay the hard truth on you. If those ones even exist.
I halfway think a candidate who went all JayBillingtonBulworth and basically reworded this post would do well in Michigan. Nah, who'm I kidding. Some dickwad would put out signs that said "Rebuilding our Future, for Michigan!" and win in a landslide.
Misterben says:
I moved from the Detroit area to DC back in 2003. My friends and family back in Michigan are just baffled by this, and can't understand why I would want to live anywhere else. When I visit them, they point out that Michigan is "perfect", the Detroit area is "a great place to live", and they ask when I'm moving back. Often, the people asking me this are the same folks who paid $400K in 2004 for a house now valued at $150K. These same folks will angrily defend the auto industry, saying they "built Detroit", and insist that it will "rebound" any day now.
My point is, I think there's a lot of self-delusion up there – probably no more than in any area where most people live in the same county their entire lives, but here, the problem is that nothing is going to get better in Michigan until the self-deluded folks who vote allow themselves to part the veil and look at the truth.
Southeastern Michigan, surrounding the metro Detroit area (principally the counties of Wayne, Oakland, and Macomb, but including the surrounding counties as well) need regional government with the power to trump the county and city governments. That's the only way to overcome the political gridlock forged by old racial and economic divides. That regional government needs to focus on building some kind of regional mass transit, so that owning a car would no longer be a requirement for having a job. Achieving that would transform the Detroit area utterly.
Northern Michigan needs to start telling the vacation condo developers to take their garbage elsewhere, and focus on agri- and eco-tourism that preserves the beautiful fields, woods, meadows, and lakes up there, and brings in more tourist dollars than mere "go to beach"-type visitors.
The other major Michigan cities (Saginaw, Grand Rapids, Lansing) need to adopt more of a city-state mentality, and focus on developing their own local strengths, rather than (as is traditional) scheming for another Big Three plant and whining to the state legislature when they don't get one.
Overall, the state should tell the casino operators to pack up their shit and get the hell out. Or at least draw a hard line and say "no more". The casinos are a joke, they aren't helping, and it is a real shame to perpetuate the wishful thinking that they inspire.
ladiesbane says:
A mild silver lining on the tornado might be that fewer children rack up years of inappropriately large loans to buy college educations that don't stretch their minds and do little toward improving their earning power. If I won the lottery, it would go to travel and school, but I just paid off my college loans, and the game was not worth the candle.
Education for a job = trade school. Education for the sheer joy of knowledge = rich kid hobby. Education that feeds a desire to know more about a specific topic = library card.
Da Moose says:
Michigan has a huge untapped natural resource: fresh water. Many southern states could use a fresh water pipeline to alleviate the long term water problems brought on by the inability of Lake Lanier to sustain, over the long term, increased levels of water usage. (Right now, Lanier has been replenished but that is in the short term) You could also install fields of wind turbines in the great lake areas to supply energy to other states like NY. On a macro level, the US really needs to force China to let their Renminbi, otherwise known as the Yuan, free float in the currency markets so that their exports increase in expense while ours decrease. The US does not have a large scale manufacturing base anymore but there are plenty of boutique manufacturers here in the States who would definitely benefit from a free floating Yuan. Right now, the Chinese have it pegged at 90% to the dollar. Also, with the increase in the move to electric powered cars, coal mining will increase significantly in the US. To wit, Eastern Ohio has seen somewhat of a mini-boom because of the re-awakening of the coal mining industry. It is because of this trend that Warren Buffet recently took a huge position in one of the rail coal transport companies, Burlington Northern. There are many hidden economic positives or potential economic positives in this country. The main hurdle for us is the partisan politics that continue to hamper the establishment of something like a long term 10-15 point economic vision. My personal opinion is that we need a second Civil War of some type to transition our culture to a more mature framework which will then allow it to more sensibly approach social problems. Right now, we are a nation of extremists. The only way we are going to expunge this poisonous extremism is thru a national brawl.
Crazy for Urban Planning says:
This post and comments are all spot on. Misterben and the points about regional government vis-a-vis transportation are what any city needs. Denver and Portland have proved how effective a regional transportation planning institution can work.
ladiesbane: Education for a job = trade school. Education for the sheer joy of knowledge = rich kid hobby. Education that feeds a desire to know more about a specific topic = library card.
That statement is correct. I ended a Masters program or Urban and Regional Planning in December of 2008 and have yet to find a position. I would only add that if I had gotten educated as a nurse or some crummy job in the health industry it would be easy to find a job. Mathew – not all people qualify for unemployment unless they have paid into the system… my days are spent looking for job opportunities.
displaced Capitalist says:
Yeah, but this problem is much more global than just Michigan. The whole world's economy–whether in a socialist or capitalist model– is based on exploiting known resources. Those resources, whether they're oil or clean water, are rapidly running out. Humans need to learn how to survive off a sustainable economy otherwise the entire planet is doomed. There is no frontier left to exploit, and the population is only getting bigger and bigger.
The only other possibility is that we figure out a way to colonize space and spread our habits of continual consumption to the rest of the galaxy. Did you see Avatar? Yeah, we're fucked.
Andrew says:
Michigan is within a day's drive of half the US population, which would make it an excellent location for fulfillment centers for on-line retailers such as Amazon. It also has cheap land, cheap electricity, and cold weather, which would make it ideal for data centers.
Parrotlover77 says:
At the risk of sounding like someone who doesn't have a clue about this topic (and, admittedly, I don't), I would intuitively think the so-called "green jobs" could fill that void, should the United States collectively decide we should spend a little money on that. It covers the spectrum from high tech R&D right down to blue collar union manufacturing. Of course, with countries like China already pumping huge amounts of cashing into its companies doing the same thing, we would need an aggressive and expensive national policy, full of varying levels of involvement, from grants to tax breaks. So, yea, it will never happen as long as Republicans exist and keep whining.
But imagine how neat it would be to travel to other countries and actually see "Made in USA" stamped on some solar panels or wind turbines.
Julie says:
It amazes me that ten people commenting on a blog post can come up with several really good, solid visions for rebuilding a state where the actual people in charge there have nothing. Is it only power-hungry, imbecilic assholes who run for office in the country anymore?
Ed says:
The "green jobs" thing has kicked around the policy world a few times. The ultimate problem is that the government can't make a compelling case for why such an industry would design or manufacture in the U.S.
The other suggestions may be good ones, but every state with an economy in the shitter (i.e., every state) is going to end up trying the same ideas. What Michigan's competitive advantage would be, I have no idea.
choada777 says:
"…where it snows so much you wish you were fucking dead."
Hilarious.
BillCinSD says:
"Policymakers are beginning to recognize the elephant in the room – the possibility that we might not get back to our previous standard of living."
and of course the real policymakers know that this was the plan starting about 40 years ago.
Nan says:
Michigan's fresh water should stay right where it is. If other regions indulge in reckless growth with zero planning, they should just suffer the consequences — Lake Lanier going dry is no excuse to go after resources in luckier states.
Then again, Michigan's luck (what little it had left) may truly be running out. Rumor has it that Pete Hoekstra, that piece of human offal who currently represents a chunk of the downer peninsula in Congress, wants to run for Governor. He could easily win. Republicans have been trying to turn Michigan into a colder version of Mississippi for decades; under Hoekstra they could succeed.
comrade x says:
Julie, lots of people, some of them actually concerned more for the well- being of our nation rather than lobbyist money, who run for office. The problem is that the power- hungry imbecilic assholes are the only ones that get the money.
We need public financing of political campaigns of course. But asking Congress to o.k. that is like asking a pusher to stop selling dope and work at McDonalds. The politicians get a lot more out of sucking corporate dick and fucking us over than just campaign money too. Most important of which is the practice of giving assholes like Lieberman cushy, high- paying jobs in the industries they champion.
The whole rotten system is probably going to just keep creaking along until an epic financial disaster is going to finally complete the process of turning the U.S.A. into a third world country.
flathead says:
I'm a nurse– one of those people with a "crummy job in the health care industry". I was a Head Start teacher in the mid to late 90's but decided that the "prosperity" of the Clinton years was unreal. So, in 98 I went back to school to get a BSN. At the time my husband was getting at least one call a day from a headhunter who had some opportunity for him. I thought "this can't last and we sure can't live on my wages when it ends" Somehow he has survived (he works in IT) and I have a job that allows me to do something useful and work part time. Really, it is not that crummy. But, then again I never imagined that work was going to be my source of fulfillment in life. No, I don't have kids either.
While I was working for head start our country was ending "welfare as we know it". All I could think was "what the hell happens when the economy tanks? What are these people with such a tenuous grasp on employment going to do? "
Now, I don't think I'm amazingly prescient. I imagine there were tons of others who felt the same way. Cripes, all you had to do was look at the strip malls multiplying and think who the hell is going to buy all this crap? No econ class needed.
Its been a race to the bottom as far as I can remember. It seems like there is always one city willing to offer even more tax incentives than the other in order to secure a few 9 dollar an hour jobs.
But hey– I live in Ohio, and Michigan is a vacationer's paradise compared to here. In fact, last year my husband and I, resolute in not getting on a plane for vacation, went to Michigan's upper peninsula. We enjoyed lots of fine hiking, and yes, blackjack. Really, Lake Superior is something to see.
Entomologista says:
You can have all the lake water you want, as long as it comes in cans labeled Old Milwaukee.
flathead says:
puhleez…lets leave the water in the Great Lakes. The southwest is full of residential areas that should never have been built.
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fuzzbuzz215 says:
As a resident of Flint, MI, I want to commend you on this article. I must admit that once the Great Recession hit I felt a great deal of schadenfreude. Flint and Michigan have been ignored for so long, I'm glad to see the rest of this country finally feel the pinch. Michigan never recovered from the last recession and this recession is likely the death blow. I'm just glad the rest of you fuckers can feel a little pain like we've been feeling for 40 years.